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Article
Publication date: 1 April 2006

Darek Klonowski

The paper aims to increase the understanding of the venture capital industry in Central and Eastern Europe (CEE) by examining the venture capital industry in Hungary, Poland, the…

2517

Abstract

Purpose

The paper aims to increase the understanding of the venture capital industry in Central and Eastern Europe (CEE) by examining the venture capital industry in Hungary, Poland, the Czech Republic, and Slovakia between 1998 and 2003. Even though the number of academic studies focusing on the venture capital activities in the CEE region has been increasing in recent years, the coverage of this industry is relatively weak and not well understood by individuals, businesses, and academics.

Design/methodology/approach

The study focuses on the analysis of secondary data available from the European Venture Capital Association on venture capital activities in the CEE region. The paper examines three key statistics that best describe the venture capital process, namely fundraising, investing, and exiting activities.

Findings

The study has three conclusions. First, venture capital financing continues to be a major source of capital to the developing firms in the region. Second, Poland is the market leader in the region in the venture capital activities as described by key statistics. Third, the countries of CEE cannot be treated as a homogeneous block.

Originality/value

The study is important for two reasons. First, the study focuses on longitudinal data between 1998 and 2003, the most important period in the development of the industry. Shifts in trends in these key statistics can only be observed by analyzing longer‐term data series. Second, the evolution of the venture capital industry in the analyzed countries could be used as a blueprint for venture capital development in other countries in the region.

Details

International Journal of Emerging Markets, vol. 1 no. 2
Type: Research Article
ISSN: 1746-8809

Keywords

Article
Publication date: 1 September 1992

Malcolm J. Morgan

Entrepreneurs can sometimes come to feel that they are not so much working for themselves as they are for a banker who is taking a smaller risk and enjoying a higher return…

Abstract

Entrepreneurs can sometimes come to feel that they are not so much working for themselves as they are for a banker who is taking a smaller risk and enjoying a higher return. However, many such companies may not realise that their problem is not lack of money in the sense of debt, but a shortage of equity (Smitham, 1990). Depending on the nature of the small business this problem can be overcome‐a venture capital company could subscribe for part of the equity of their organisation. Venture capital is defined as an investment in an instrument that is not traded on a recognised stock exchange. Venture capital is not a modern phenomenon, although over the last 150 years, it has become more institutionalised within the international financial framework (Tulloch and Walsh, 1991).

Details

Management Research News, vol. 15 no. 9
Type: Research Article
ISSN: 0140-9174

Book part
Publication date: 4 August 2014

Janke Dittmer, Joseph A. McCahery and Erik P. M. Vermeulen

There is arguably a balance between exploration and exploitation within a commercial organization which leads to sustainable growth and value creation. Exploratory activities are…

Abstract

There is arguably a balance between exploration and exploitation within a commercial organization which leads to sustainable growth and value creation. Exploratory activities are associated with search, innovation, risk-taking and experimentation. Activities, such as selection, implementation and execution are considered exploitative in nature. We show that the governance structures and mechanisms that are typically employed in venture capital-backed companies ensure an optimum balance between the exploratory behavior of entrepreneurs and the exploratory focus of venture capitalists. New players in the venture capital cycle, such as crowdfunding platforms and corporate venture capital units, often fail to understand the importance of the interaction and interrelation between the apparently opposing exploratory and exploitative activities. However, collaborative venture capital models that are currently emerging appear to restore the necessary equilibrium in the “new” venture capital cycle.

Details

Exploration and Exploitation in Early Stage Ventures and SMEs
Type: Book
ISBN: 978-1-78350-655-2

Keywords

Book part
Publication date: 21 May 2009

Erik J. Hunter, J. Henri Burgers and Per Davidsson

Despite an increase in businesses started by celebrities, we have limited understanding as to how celebrity entrepreneurs benefit new ventures. Drawing on a reputational capital

Abstract

Despite an increase in businesses started by celebrities, we have limited understanding as to how celebrity entrepreneurs benefit new ventures. Drawing on a reputational capital perspective, we develop the notion of celebrity capital and show how it can be used to uniquely differentiate the venture and to overcome liabilities of newness. We discuss how celebrity capital can negatively influence the venture when negative information about the celebrity surfaces and in terms of limiting the scope of the venture. We discuss the different strategic implications of celebrity capital for ventures using celebrity entrepreneurs versus endorsers.

Details

Entrepreneurial Strategic Content
Type: Book
ISBN: 978-1-84855-422-1

Article
Publication date: 16 January 2007

Priit Sander and Margus Kõomägi

The paper aims to investigate the views of Estonian private equity and venture capitalists about the valuation of high‐growth companies and compare these with theoretical…

2927

Abstract

Purpose

The paper aims to investigate the views of Estonian private equity and venture capitalists about the valuation of high‐growth companies and compare these with theoretical recommendations found in corporate finance and venture capital literature.

Design/methodology/approach

The analysis was carried out by using the case study methodology. Structured interviews were conducted in order to present the material for analysis. The dominant model of the case study analysis is exploratory, using an explanation‐building and pattern‐matching technique.

Findings

Main findings of the empirical study show that Estonian private equity and venture capitalists make the valuation somewhat differently compared to Western European and American ones. Some findings do not confirm the suggestions made by scientists.

Research limitations/implications

Some of the required data were considered to be a business secret. The research could be extended to a broader sample.

Practical implications

The findings can be used by the managers of private equity and venture capital funds for choosing appropriate cost of capital and valuation model for venture capital projects.

Originality/value

The paper is the first empirical paper, investigating how Estonian private equity and venture capitalists make the valuation of target companies.

Details

Baltic Journal of Management, vol. 2 no. 1
Type: Research Article
ISSN: 1746-5265

Keywords

Article
Publication date: 1 December 2005

Jarunee Wonglimpiyarat

Given that the stock market is essential for the venture capitalists to exit through an initial public offering (IPO), this study explores how the laws and regulations governing…

1313

Abstract

Given that the stock market is essential for the venture capitalists to exit through an initial public offering (IPO), this study explores how the laws and regulations governing the capital markets affect the venture capital industry. The paper discusses the impact of US federal state laws and Securities and Exchange Commission (SEC) regulations to the venture capital markets, arguing if the rules and regulatories are burdensome to entrepreneurs and new‐growth businesses. The impact of Sarbanes‐Oxley Act and the future Investment Act on venture capital funds and entrepreneurial companies going public are also discussed. The paper proposes the model of venture capital financing describing the process from fund raising to investment exits, the linkages of the venture capital market to the financial/capital markets and the related capital market laws. The policy implications on SEC regulations essential to the development of venture capital industry are suggested.

Details

Journal of Financial Regulation and Compliance, vol. 13 no. 4
Type: Research Article
ISSN: 1358-1988

Keywords

Article
Publication date: 19 August 2020

Yonghong Jin, Meng Xu, Wei Wang and Yuqin Xi

The purpose of this paper is to discuss how venture capital institutions can use their syndicated investment network to help listed companies to achieve better performance in…

Abstract

Purpose

The purpose of this paper is to discuss how venture capital institutions can use their syndicated investment network to help listed companies to achieve better performance in mergers and acquisitions (M&A) activities.

Design/methodology/approach

This paper builds a fixed effect unbalanced panel regression model to study the impact of venture capital network on the M&A performance of listed companies.

Findings

Evidence indicated that the stronger the information resource acquisition ability of venture capital institutions in the network, the better the listed company's M&A performance supported; the stronger the information resource control ability of venture capital institutions in the network, the better the listed company's M&A performance supported; the higher the participation of venture capital institutions, the more significant the positive impact of information resource acquisition and information resource control abilities on M&A performance in the network.

Research limitations/implications

The data in this paper are from China's Growth Enterprise Market (GEM), other markets may be considered in the future research studies.

Practical implications

The research conclusions of this paper affirm the positive role played by venture capital institutions through syndicated investment in eliminating information asymmetry in M&A of invested companies. The information resource acquisition and control abilities and participation degree of the venture capital network have positively promoted the M&A performance of the invested enterprises.

Originality/value

The conclusions of this paper not only provide useful supplements to existing research literature on venture capital network functions and corporate M&A but also have certain guiding value for venture capital institutions and start-ups to better use venture capital practices to improve their capabilities and performance.

Details

China Finance Review International, vol. 11 no. 1
Type: Research Article
ISSN: 2044-1398

Keywords

Article
Publication date: 21 December 2017

Mark R. Mallon, Stephen E. Lanivich and Ryan L. Klinger

Sustainable Family Business Theory states that human, social, and financial capital are important for new family venture growth, yet there may be multiple combinations that could…

Abstract

Purpose

Sustainable Family Business Theory states that human, social, and financial capital are important for new family venture growth, yet there may be multiple combinations that could be beneficial. The purpose of this paper is to examine whether all three types of resources are always needed for growth.

Design/methodology/approach

Fuzzy-set Qualitative Comparative Analysis, a configurational method, is used to investigate which combinations of human, social, and financial capital consistently lead to new family venture growth.

Findings

Multiple distinct combinations of resources – usually containing some form of human capital along with either social or financial capital – were sufficient for new family ventures to grow.

Research limitations/implications

The findings contribute to a more accurate Sustainable Family Business Theory in terms of the resource bundles needed to achieve growth. Not all three primary resources are needed at founding for the venture to grow. Results suggest a need for renewed focus on human capital in family venture research, as well as further investigations of the resource configurations uncovered here and their effects on family firm outcomes.

Practical implications

Given the costs associated with acquiring resources, the findings can inform family entrepreneurs and other stakeholders purposed with assisting new family ventures regarding optimal avenues of achieving growth.

Originality/value

This study advances theory by demonstrating which combinations of primary resources lead to new family venture growth. The findings shed light on how human, social, and financial capital may substitute for each other, as well as how the value of each depends on the presence or absence of the others.

Details

International Journal of Entrepreneurial Behavior & Research, vol. 24 no. 2
Type: Research Article
ISSN: 1355-2554

Keywords

Article
Publication date: 1 March 2013

David Lingelbach

How does venture capital (VC) emerge in emerging and developing economies? This paper aims to use case data from an early Russian VC fund to extend a previous model exploring that…

Abstract

Purpose

How does venture capital (VC) emerge in emerging and developing economies? This paper aims to use case data from an early Russian VC fund to extend a previous model exploring that question.

Design/methodology/approach

Case studies of VC emergence from South Africa, Botswana, and Russia are compared, from which a conceptual model is developed.

Findings

VC emerges in a process consisting of four stages: enabling, coproducing, diffusing, and replicating. The Russian case shows that these stages are linked in a circular process, i.e. replicating can lead to enabling. VC emergence can also begin at any stage. A higher degree of public‐private coproduction may outweigh the absence of a completed enabling stage, suggesting that strength in one stage can compensate for weakness in others.

Research limitations/implications

This paper invites scholars to reconsider VC emergence in a more nuanced manner that takes into account its complex, processual nature. The inclusion of Russian data also encourages researchers to examine more closely the subtle ways in which the private and public sectors may interact in emerging markets in pursuit of common goals. This study's findings have important linkages with other critical accounts of international business. The study addresses weaknesses in earlier literature by employing a multi‐disciplinary, cross‐context approach that utilizes data from a foreign VC investing in Russian small to medium‐sized enterprises.

Practical implications

VCs considering investment in Russia should examine how early entrants to the industry formed cooperative relationships with local governments. Policymakers should re‐examine the relative importance of national and local efforts to promote VC and other innovation‐related initiatives in emerging markets.

Originality/value

This study moves beyond current economics‐dominated understanding of VC, which focuses on antecedents (enabling conditions). It reports the central role of public‐private coproduction in VC emergence, the feedback between diffusion and coproduction in emergence, and, most importantly, the diminished importance of enabling conditions. This paper presents the first fund‐level study of Russian VC.

Details

Critical perspectives on international business, vol. 9 no. 1/2
Type: Research Article
ISSN: 1742-2043

Keywords

Article
Publication date: 2 November 2015

Lisa Jane Callagher, Peter Smith and Saskia Ruscoe

Interest in venture capital markets continues to be of relevance to politicians and policy makers, recognizing the importance of government participation in venture capital market…

1133

Abstract

Purpose

Interest in venture capital markets continues to be of relevance to politicians and policy makers, recognizing the importance of government participation in venture capital market development. Yet advice regarding developing venture capital markets appears increasingly disparate. The paper aims to discuss these issues.

Design/methodology/approach

The authors engage the assumptions that underpin three dominant policy approaches to the development of venture capital markets with regard to the role of governments in that process. The authors categorize existing empirical studies against three approaches and give examples of the different government policies associated with the various approaches.

Findings

Direct and indirect approaches recognize the importance of active stock markets but largely ignore the dynamic processes of markets, asserting that the provision of capital, institutional changes, and financial incentives ex ante will cause a positive market reaction, regardless of the market’s context. The recent timed approached is purported as being more comprehensive in its awareness of the need to adapt to countries’ contexts and the need for varying policies at the different stages of market emergence.

Research limitations/implications

Limited empirical research tests the voracity and limitations of the timed approach. The challenge in doing so is that evolutionary theories typically explain an event after it has occurred, thus its predictive power is often limited. Future research might investigate the efficacy of policy levers based on the timed approach.

Practical implications

The authors highlight the need for the development of venture capital markets, rather than a venture capital industry.

Originality/value

The authors extend the existing venture capital market development categories and evaluate each approach in terms of the efficacy of government’s roles in venture capital market development in light of the existing evidence of economic development and entrepreneurial activity.

Details

Journal of Entrepreneurship and Public Policy, vol. 4 no. 3
Type: Research Article
ISSN: 2045-2101

Keywords

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